Hochul’s $3 billion ‘Inflation Refund’ check plan called a cynical ploy by some, praised by others

There’s nothing like a check in the mail from the government to make you feel all warm and fuzzy about the ruling party.

And who doesn’t love giving away $3 billion?

Gov. Kathy Hochul hopes to change the narrative about New York’s high cost of living. Buoyed by the state’s healthy economy, the state expects to see a huge sales tax bill by the end of the fiscal year in March.

The Buffalo Democrat wants to share $3 billion with 8.6 million taxpayers in New York, individuals earning up to $150,000 a year and couples filing joint tax returns with total income up to $300,000.

“I want to make sure it gets right back into the hands of New Yorkers in a way that they can feel,” Hochul said at an event in the Bronx on Dec. 9. “This is something I want them to know is tangible. is your money.”

While Hochul hopes to find a place for the $3 billion program in the state budget, her administration has yet to decide how the governor’s name, image and likeness will appear on the checks. It must also be decided how the deal will be concluded.

Does Hochul do this electronically with the state’s financial system? Or will Hochul go old-fashioned and issue 8.6 million checks sent through the US Postal Service at 54 cents per letter?

Hochul Giveaway Announced Weeks Before Congestion Pricing Begins

She announced the giveaway just a month before the debut of the state’s congestion pricing program in Manhattan, with tolls for travel south of 60th Street poised to hit the wallets of Hudson Valley consumers fatigued by persistent inflation .

Hochul’s giveaway drew skepticism and ridicule from economists and government watchdogs. Some leading lawmakers in the Lower Hudson Valley state have taken a wait-and-see approach.

Meanwhile, state union officials and social service organization executives have praised her proposed $3 billion giveaway.

More: Thousands of Hudson Valley seniors are missing out on the full tax savings from the Enhanced STAR program

Hochul’s rebates to 8.6 million New York taxpayers would come out of state coffers in tandem with rising sales tax revenues from the humming New York economy, fueled in part by inflated prices. Hochul said state reserves are at 15%, up from 4% when she became governor three years ago.

Hochul estimates that 986,000 Hudson Valley taxpayers would forfeit refund checks, according to the governor’s press release.

“I say enough is enough,” Hochul said. “Let’s give it back to them. They didn’t ask for inflation.”

Hochul’s “Inflation Refunds” would arrive in the fall of 2025 during off-year elections with some local races on the ballot.

The payments are modest. There’s $300 for single taxpayers like me who make up to $150,000 a year. It would be $500 for couples making up to $300,000.

It would cover one month of my new used car payment. Or less than the cost of filling my half-full heating oil tank last week.

One Hochul critic: ‘It’s the tiramisu of terrible public policy’

Economist Mark Weinstock said Hochul’s plan could actually create inflationary pressures in New York’s economy, injecting $3 billion into New Yorkers already dealing with the high costs of housing, energy and public education in the state.

Then there’s the $9 per day surcharge for drivers traveling south of 60^e Street in Manhattan, which will launch in early January.

“It’s very cynical,” said Weinstock, an associate professor of economics at Pace University. “After the election, she wants to give back money so that people remember the check instead of the extra costs she incurs.”

Hochul denied that the plan would drive up prices.

Ken Girardin, research director at the conservative Empire Center for Public Policy in Albany, acknowledged the sweetness of a big government check landing in someone’s mailbox. But he criticized what he called the fiscal ploy designed to stoke good feelings toward the governor.

“It’s the tiramisu of terrible public policy,” Girardin said, referring to the sweet rum-infused dessert. “It’s a dirty tradition in New York where elected officials want gratitude. We may have strong sales tax growth, but the costs of Medicaid and school aid are out of control.”

Girardin said $3 billion was a significant portion of state tax revenue, while the state operations budget for 2024 was $128 billion. He would prefer to see the $3 billion used to reduce the state’s health insurance tax or pay off the state’s debt.

Melinda Person, president of the New York State United Teachers, hypothesized that Hochul’s $300 check would help level the economic playing field between rich and poor.

“We’re simply looking for solutions that address the widening gap in income and wealth between the super-rich and the rest of us, and this proposal is a good first step,” Person said.

The union representing state workers also fully supports Hochul’s plan.

“Governor Hochul’s proposal for a new inflation refund represents the kind of thinking we need to make it easier for New Yorkers to live, work and raise a family in our state,” said NYS Public Chairman Wayne Spence Employees Federation.

Reimbursement controls Hochul’s opening salvo for 2025 budget talks

Hochul announced the proposal Monday as her opening salvo in Albany’s 2025 budget battle, which won’t begin in earnest until Hochul unveils her spending plan in January.

“My agenda for the coming year will be focused on putting money back in people’s pockets, and that starts by proposing inflation refund checks of up to $500 to help millions of hardworking New Yorkers. It’s simple: the cost of living is too damn high and New Yorkers deserve a break.”

She joins a string of recent New York governors who have embraced the check-in-the-mail strategy for the state’s budget policy.

More: Latimer’s 2025 budget plan increases property taxes by 2% when you add sewer, water and waste taxes

Governor David Paterson began transforming the STAR property tax rebate program in the late 2000s by sending checks to some STAR recipients. These checks have continued under Andrew Cuomo and now Hochul, with some checks issued in 2024 with returns of as much as $5,000 for those enrolled in the Enhanced STAR program.

Paulin withholds judgment, while Lawler doesn’t wait

Senate Majority Leader Andrea Stewart-Cousins, D-Yonkers, declined comment through her spokesperson Mike Murphy, who said the leader needed more time to study it.

Assemblywoman Amy Paulin, D-New Rochelle, said she was not opposed to improving the financial position of New Yorkers with the state rebate. But she said it is too early to back the audit program before Hochul unveils its 2025 budget plan, including proposals for aid to the powerful education and health sectors.

Paulin noted that New York helped fund its growing Medicaid program in 2024 with a new tax on managed care programs. She said the tax may not survive Donald Trump’s return to the Oval Office.

“I want to see first what she proposes to fund our schools and hospitals,” said Paulin, chairman of the Assembly Health Committee. “Trump can abolish that tax. If the governor has a crystal ball about what the federal government is planning, that’s great. But I’m worried. And as much as I want to give back, I want to make sure we don’t cut off our noses to despise our faces.”

Small said Hochul’s 2025 budget will maintain the foundation’s current aid formula and will not eliminate harmless payments, as recommended in the recent Rockefeller Foundation report.

“Governor Hochul has provided more funding for public schools than any governor in the state’s history, and she is committed to continuing that support,” Small said.

Hochul’s tax giveaway has also drawn criticism from Rep. Mike Lawler, R-Pearl River, who recently won reelection and continued to speak out against Hochul’s congestion pricing plan in Manhattan. Lawler has been touted as a possible gubernatorial candidate in 2026.

“Taking thousands of dollars out of New Yorkers’ left pockets and then putting $500 in their right pockets isn’t a tax cut, it’s an insult,” Lawler said on the social media platform the exits. Doing the same to commuters with her cash grab with congestion pricing and then charging them ‘only’ $2500 is not a savings, it’s a scam.

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David McKay Wilson writes about tax issues and government responsibility. Follow him on Twitter @davidmckay415 or email him at dwilson3@lohud.com.

This article originally appeared on Rockland/Westchester Journal News: Hochul’s $3 Billion ‘Inflation Refund’ Plan in New York Called a Cynical Ploy by Some